Development of the Drosophila eye is a genetically amenable process that shares conserved mechanisms with vertebrate eye development. The Hedgehog (Hh) signaling pathway plays a critical role in early eye development in both Drosophila and vertebrates, in addition to its many other developmental functions. A screen for mutations affecting early pattern formation in the Drosophila eye disc has been carried out using a mosaic approach to allow the isolation of genes with additional embryonic functions. Two of the genes isolated in this screen, sightless (sit) and hyperplastic discs (hyd), appear to have opposite effects on Hh signaling. The current proposal aims to characterize the molecular functions of these genes and their role in eye development. sit is required for Hh to activate its target genes in both the eye disc and the wing disc, but does not affect the expression of hh itself. A molecular analysis of the sit gene will be undertaken in the hope of revealing its likely function, and genetic methods will be used to determine its position in the Hh pathway. The biochemical mechanism of Sit protein function predicted from these investigations will then be tested. hyd encodes a HECT family E3 ubiquitin ligase that is required to prevent premature photoreceptor differentiation, hh expression, and overgrowth of surrounding wildtype cells. A combination of genetic and biochemical approaches will be used to test whether the normal function of Hyd is to block Hh expression or signaling, and to identify proteins ubiquitinated by Hyd. The function of hyd in the development of other tissues will also be determined. Finally, the mosaic genetic screen will be expanded to cover another 20 percent of the genome. Mutations required for cells in the eye disc to differentiate as retinal tissue will be isolated, placed into complementation groups and mapped. The phenotypes of the novel genes will be characterized and the most interesting candidates will be selected for molecular analysis. The results of this study are likely both to provide a more complete understanding of the process of eye development in Drosophila, and to uncover mechanisms and molecules that contribute to development and are misregulated in disease in higher organisms.